If you are a not-for-profit business/organization in Georgia, are all of your purchases exempt from sales tax? Most people think the answer is yes. Actually the opposite is true.
In Georgia, sales tax exemptions are not granted to churches, religious, charitable, civic and other non-profit organizations. These organizations are required to pay the tax on all purchases of tangible personal property. Furthermore, when such organizations engage in selling tangible personal property at retail, they are required to comply with provisions of the Act relating to collection and remittance of the tax. (GA Regulation 560-12-2-.22)
There are, however, certain instances where sales to a 501(c)(3) organization are exempt. For example, sales to any chapter of the Georgia State Society of the Daughters of the American Revolution are tax exempt under section 501(c)(3) of the Internal Revenue Code. The exemption application process for a qualifying organization is via a letter to the Commissioner.
Also exempt from July 1, 2015 to June 30, 2018, are sales of tangible property and services to a nonprofit volunteer health clinic primarily treating patients with incomes below 200% of the poverty level and which property and services are used exclusively in performing a general treatment function when such clinic is a tax exempt entity under the Internal Revenue Code and obtains an exemption determination letter from the Commissioner. Application is through Form ST-NVHC.
In some instances, sales by a qualified nonprofit organization are not subject to tax. But purchases made for use by a qualified nonprofit organization are subject to sales and use tax. Examples of this are nonprofit parent teacher organizations. Sales of food or food ingredients to and by any Girl or Boy Scout Council in connection with fundraising activities are exempt. But purchases made for use by a Girl Scout or Boy Scout Council are subject to sales and use tax.
Similar questions can be posed that can be addressed here such as “As a 501(c)(3) organization, can we purchase items for the church without paying the sales tax. If so, which form do we use?”
Churches generally have to pay sales tax on the items purchased and also must collect sales tax on any items that they may sell. That includes books, used clothing or other types of resale outlet items. However, if a church is a tax exempt religious organization organized under section 501(c)(3) of the Internal Revenue Code, it may purchase pipe organs or steeple bells exempt from tax.
Some exemptions exist for sales made by churches under GA Code Sec 48-8-3(15)(B). Those exemptions are 1) the sale results from a specific charitable fund-raising activity not exceeding 30 days in any calendar year; 2) no part of the gross sales or net profits from the sales inures to the benefit of any private person; and 3) if the gross sales or net profit from the sales are used for the purely charitable purposes of relief to the aged, church-related youth activities, religious instruction or worship or construction or repair of church buildings or facilities.
Depending on your activities, your church may need to be registered to collect sales tax in GA. (GA Sales and Use Tax Exemptions, GA DOR, June 16, 2015)
So don’t assume if you are a not-for-profit organization in Georgia that all your purchases are exempt from sales tax. As with most laws regarding sales and use tax, the guidelines can be confusing.
Questions? Comments? Feel free to share any confusion you’ve encountered with the Georgia DOR concerning sales tax exemptions for your not-for profit organization.
Other recent “Georgia (GA)” posts by Lauren Stinson, CMI:
- Sales Tax on Labor: In Georgia, Not All is Created Equal
- A Review of Georgia's Sales Tax Exemption Certificates
- Georgia's New Rule for Itemization of Sales and Use Tax
- Georgia FBA Sellers: Your Sales Tax Registration Obligations
- Georgia DOR Is Making Big Changes to Direct Pay Permit Rules